Introduction: Why Most People Struggle With Saving
Ramesh, a 32-year-old IT professional from Pune, earns ₹80,000 a month. But at the end of every month, he’s left wondering: “Where did all the money go?”
Despite a good salary, rising expenses, lifestyle upgrades, and a lack of financial planning leave him with little to save. His story is not unique—millions of Indians face the same struggle.
The real secret? A practical monthly budget. Not a restrictive one, but a system that balances your needs, wants, and future goals.
Build a Monthly Budget in 8 Simple Steps
Step 1: Understand Your Income & Expenses
Budgeting starts with awareness.
- Net Monthly Income: Salary after tax + bonuses + side income.
- Fixed Expenses: Rent/EMI, electricity, groceries, and school fees.
- Variable Expenses: Dining out, shopping, streaming subscriptions.
📌 Pro Tip: Track your expenses for at least 2 months. Use apps like Walnut, ET Money, or a simple Excel sheet.
Step 2: The 50-30-20 Rule (Made Practical for Indians)
A globally popular framework:
- 50% Needs → Rent/EMI, groceries, utilities.
- 30% Wants → Entertainment, shopping, travel.
- 20% Savings/Investments → SIPs, insurance premiums, emergency fund.
✅ Example (Income: ₹80,000/month):
- Needs = ₹40,000
- Wants = ₹24,000
- Savings = ₹16,000
This ensures a balance between living well today and securing tomorrow.
Step 3: Build an Emergency Fund
Before investing, create a financial cushion.
- Target: 6 months of expenses.
- Where to keep: Liquid mutual funds, sweep-in FD, or high-yield savings account.
- Why: Protects you from job loss, medical emergencies, or unexpected expenses.
Example: If monthly expenses = ₹40,000 → Emergency fund = ₹2.4 lakh.
Step 4: Automate Your Savings
One reason people struggle with budgeting is a lack of discipline. The solution? Automation.
- Set up SIPs (Systematic Investment Plans) on the 1st of every month.
- Use auto-debit for RD/FD contributions.
- Treat savings like a non-negotiable bill.
💡 When savings happen first, spending automatically adjusts.
Step 5: Control Lifestyle Inflation
As income grows, expenses often rise in equal measure. Avoid this trap.
- Don’t upgrade your car or phone with every salary hike.
- Maintain a “lag”: Increase lifestyle spending only after increasing savings.
- Follow the 50% Rule of Increment: If salary rises by ₹10,000, allocate ₹5,000 to investments, and use the rest for lifestyle upgrades.
Step 6: Use the Right Budgeting Method
Budgeting isn’t one-size-fits-all. Here are three approaches:
- Envelope System (Cash Users) – Allocate cash in envelopes for groceries, transportation, and leisure activities. When it’s over, it’s over.
- Zero-Based Budgeting – Assign every rupee a purpose. Income – Expenses = 0.
- App-Based Tracking – Tools like Groww, INDmoney, or YNAB (international) for tech-savvy users.
Select the system that best suits your personality.
Step 7: Prioritize Debt Repayment
High-interest debt kills savings.
- Pay off credit card dues (36–42% annualized interest!).
- Close personal loans faster.
- For home loans, consider using a balance transfer or partial prepayment.
📌 Example: ₹1 lakh credit card debt at 36% → Grows to ₹2.85 lakh in 3 years if unpaid.
Step 8: Include Wealth-Building Investments in Budget
A reasonable budget doesn’t just control spending—it builds wealth.
- Equity Mutual Funds (SIPs): Long-term compounding.
- Debt Funds/FDs: Stability and liquidity.
- Insurance Premiums: Protection against risks.
- Retirement Fund (EPF/PPF/NPS): Long-term security.
Budgeting ensures you don’t skip these essentials.
Sample Monthly Budget (For ₹80,000 Income)
| Category | Suggested % | Amount (₹) |
| Rent + Utilities | 25% | 20,000 |
| Groceries + Essentials | 15% | 12,000 |
| Transport | 10% | 8,000 |
| Lifestyle (Wants) | 20% | 16,000 |
| SIPs & Investments | 20% | 16,000 |
| Insurance Premiums | 5% | 4,000 |
| Emergency Fund Build | 5% | 4,000 |
Common Budgeting Mistakes to Avoid
❌ Ignoring small expenses like coffee/Swiggy orders (they add up).
❌ Not reviewing the budget annually.
❌ Using credit cards without tracking spending.
❌ Having no buffer for irregular expenses (festivals, weddings).
Real-Life Case Studies: How Indians Made Budgeting Work
Case Study 1: Ramesh (IT Professional, Pune) – The Overspender Who Found Balance
- Problem: Ramesh earned ₹80,000/month but ended up with <₹2,000 left at month-end.
- Mistake: No tracking of Swiggy/Zomato spends and credit card EMIs.
- Budget Fix: Adopted the 50-30-20 Rule.
- Action Taken:
- Needs: ₹40,000
- Wants: ₹24,000 (cut down food apps to ₹10,000)
- Savings: Increased SIP from ₹2,000 to ₹16,000.
- Outcome (3 years): His SIP corpus grew to ~₹6.8 lakh, vs. nothing earlier.
Case Study 2: Sneha & Karthik (Young Couple, Bengaluru) – Balancing EMIs & Investments
- Problem: Household income = ₹1.2 lakh/month, but home loan EMI = ₹45,000. Felt “too broke” to invest.
- Mistake: Treated EMI as an excuse to avoid saving.
- Budget Fix: Adopted Zero-Based Budgeting. Every rupee was assigned—EMI, SIP, insurance, groceries.
- Action Taken:
- Cut vacations from ₹15,000/year to ₹5,000.
- Started ₹10,000 SIP in equity + ₹5,000 in debt funds.
- Outcome (5 years): The portfolio grew to approximately ₹11.2 lakh. They realized EMI doesn’t stop wealth creation.
Case Study 3: Aarav (25, First Job, Delhi) – Starting Small With SIPs
- Problem: Believed savings can wait until salary grows.
- Mistake: Spent the entire ₹35,000 salary.
- Budget Fix: Used the “Save First” principle. Automated ₹3,000 SIP on the 1st of every month.
- Outcome (10 years): Just ₹3,000/month SIP at 12% CAGR → ~₹7 lakh corpus by 35. By the age of 45, this same habit could accumulate approximately ₹27 lakh.
Case Study 4: Sharma Family (Middle-Aged Couple, Jaipur) – Avoiding Lifestyle Inflation
- Problem: Household income increased from ₹1 lakh to ₹1.6 lakh over a 5-year period. Expenses rose equally. No additional savings.
- Mistake: Upgraded car, frequent dining, lavish weddings.
- Budget Fix: Followed “50% Rule of Increment” – each salary hike split into half lifestyle, half savings.
- Action Taken: Shifted ₹20,000/month into balanced advantage funds.
- Outcome (10 years): Built corpus ~₹46 lakh vs. just ₹15 lakh if they continued FD-only savings.
Why These Stories Work
- Ramesh shows that tracking expenses works.
- Sneha & Karthik show you can invest even with EMIs.
- Aarav demonstrates that starting small early is crucial.
- The Sharma family demonstrates that controlling lifestyle inflation can lead to wealth creation.
Sample Budgeting Template With Case Study Mix
| Category | Suggested % | Example (₹80k Income) | Case Study Reference |
| Rent + Utilities | 25% | 20,000 | Ramesh |
| Groceries + Essentials | 15% | 12,000 | Sharma Family |
| Transport | 10% | 8,000 | Sneha & Karthik |
| Lifestyle (Wants) | 20% | 16,000 | Ramesh |
| SIPs & Investments | 20% | 16,000 | Aarav |
| Insurance Premiums | 5% | 4,000 | Sneha & Karthik |
| Emergency Fund Build | 5% | 4,000 | Sharma Family |
FAQs on Monthly Budgeting
Q1. Is budgeting only for people with low income?
No. Even HNIs need budgeting to optimize investments and avoid lifestyle creep.
Q2. Should I save before paying EMIs?
Pay mandatory EMIs first, but prioritize savings right after.
Q3. What if I fail to stick to my budget?
It’s okay. Budgeting is a habit—track mistakes, adjust categories, and restart.
Q4. How much should I invest monthly?
At least 20% of income, more if you have fewer obligations.
Final Words: A Budget That Actually Works
A monthly budget isn’t about restriction—it’s about control, clarity, and freedom.
Just like Ramesh, once you put a system in place, you stop asking “Where did my money go?” and start seeing real progress—whether it’s saving for a house, planning a vacation, or building wealth for retirement.
👉 The real secret to saving more is simple: Make your money work for you with a budget that balances today and tomorrow.
Disclaimer
The information provided in this blog is for educational purposes only and should not be considered as financial, investment, or tax advice. Please consult a qualified financial advisor before making any investment decisions.
VSJ FinMart is an AMFI-registered mutual fund distributor (MFD) and does not provide investment advisory services. Mutual fund investments are subject to market risks; please read all scheme-related documents carefully before investing.